Contractualization: Action needed on concerns of both labor, management

THE issue of labor contractualization figured prominently in the last election campaign with all the presidential candidates endorsing the move to abolish – or at least to revise it and keep it within reasonable bounds.

There were some words of caution from the secretary of labor at the time, Rosalinda Baldoz, who pointed out that millions of workers are at risk of losing their jobs if the next president of the country moves to abolish all forms of contractual employment. There may be some practices used by some companies to circumvent the country’s labor laws, she said, but there are many legitimate forms of independent subcontracting, such as those for overseas Filipino workers.

The Labor Code of the Philippines enacted in 1974 spells out the rights and privileges of Filipino workers, including contractual work. It was amended 20 times by presidential decrees, nine executive orders, four laws passed by the Batasang Pambansa, and 13 Republic Acts approved by Congress. Article 1096 of the Labor Code governs the system of contractual employment in its many forms, including outsourcing, subcontracting, casualization, fixed-term contracting, use of labor agencies, and temporary hiring.

Contractual employment appears to be the only viable system in certain areas, such as in overseas work, in seasonal work such as harvesting in rice areas and sales during the Christmas season, and in the fast-growing Business Process Outsourcing industry in the Philippines.

There are now moves to amend the law to remove the more onerous provisions that allow such abuses as deliberately limiting labor contracts to five months to avoid regularizing them after a six-month probationary employment. Workers lament that with the absence of security of tenure, they cannot properly raise families and send their children to school.

At the same time, employers need to look at productivity and efficiency. Good workers at the time of employment sometimes are not as productive after two or three years, slackening in their work attitudes because of their security of tenure. They no longer perform well and just wait for payday. Management seeks to straighten them out and correct them and, when finally it becomes necessary, eases them out in accordance with labor laws. The management sector has found the administration of these laws is often geared to labor and sometimes out of order.

Accordingly, any move to amend the law to benefit workers should be balanced with the concerns of employers who need to maintain the establishment’s viability and profitability. A benefit given employees should be balanced by an equivalent benefit to employers, such as more relaxed laws on hiring and firing employees. Employers will always need workers and workers will always need employment. There should be a happy equilibrium between them. Unduly improving the position of one against the other would affect that balance.

Market forces should be considered in the move to amend the law. When a worker wants to leave his employment for a better opportunity elsewhere, he should be able to do so without any difficulty. Similarly when an employee is no longer performing the way he should, an employer should more easily be able to let him go. It should work two ways.

Good workers are always in demand; let their employers motivate them to stay. Similarly, workers need to motivate their employers to keep them, so they best work harder in their positions.

When the government – Congress and the Executive Department – begin working on the contractualization issue, they should consider all these concerns of both workers and management so they will come up with a labor law that is fair and just to all concerned while upholding the highest national interest.